Despite government figures to indicate China still has a contingent of 150 million migrant workers awaiting to transfer from rural to urban areas, signs have emerged to show that the country's labor resources is on a trend of shrinkage.

Although southern booming GuangdongProvince has sucked up more than 19 million migrant workers, its annual labor shortfall remained at two million. Factories found it hard for them to employ migrant workers with low income any more.

Shortfall of labor power has cropped up not only in coastal booming towns, but in inland cities. Central China's Henan Province, the country's most populous province, for instance, has gone all out to expand textile and clothing industries but the workforce in local textile and clothing mills was only 70 percent of what they had expected.

A latest survey from the Ministry of Labor and Social Security showed that in 2006, construction engineering and machine building enterprises in prosperous coastal areas are willing to pay workers at least 1,000 yuan (about US$125) per month, almost equal to the local monthly salary of college graduates. But these enterprises paid 600 yuan to workers every month three years ago.

Han Jun, director of the Research Center of Rural Economy under the Development Research Center of the State Council, said that 20 percent of the rural areas in China no longer have surplus labors at present.

XinyangCity of HenanProvince had 3.5 million rural laborers, and 1.86 million of them, mostly young or middle-aged, had gone to work in major cities. And the city hired at least 30,000 workers to pick tea this year owing to intensive female labor outflow.

Cai Fang, a noted expert in the ChineseAcademy of Social Sciences, acknowledged that although there will not be a shortfall of laborers in the absolute number of trades and industries in the years ahead, the scarcity of laborers will be felt in some areas and in some particular industries.

Since China initiated reform and opening-up policies in late 1970's, noted Prof. Wen Tiejun with elite Remin University in Beijing, factories and enterprises, obtaining cheap land thanks for governmental preferential policies and mainly engaging in processing materials supplied by overseas clients, have mushroomed in southern and eastern China cities.

The factories and enterprises reaped profits by capitalizing on cheap land and labor resource, but did not establish their own brands and intellectual properties, as they failed to inject enough input into research and development. Therefore, overproduction and excessive competition emerged in the country's manufacturing industries. For the sake of survival, some factories kept the salary at a low level for the rural migrant workers without buying their social insurance, Wen said, adding that poor salary and welfare system cooled the migrant workers' zeal for working in cities.

And some rural labor began returning home because of poor welfare system for migrant workers in cities.

Liu Shilong, a farmer in central HenanProvince, said both of his sons have come back tilting farmland after years of work in cities, since they could not stand heavy workload any more in their 40's and their current farm work could earn as much as working in cities.

China's labor resource shortage can be ascribed to another factor: population aging.

In the past 25 years, China's economy maintained high-speed growth thanks for sufficient labor force at their young and middle age. But today, China's population aging has reached the world's average level, while per capita GDP was merely one fifth of the world's average level.

For instance, populous HenanProvince now has 7.18 million population aged 65 or above, taking up to eight percent of its total population. In the next 20 years, its population will continue to be fast aged.

The urgent task for the government is to increase rural laborers' income and welfares, Prof. Wen acknowledged. "When we enjoy the profits and bonuses brought by these laborers, we should at the same time establish capital reserves to their support for their old age."